Border Reiver

They have already given their predictions- the sky is going to fall in and we are all doomed. Just like every year since 2004. They think if they keep saying it for long enough they will have to be right eventually

I agree about one thing- the speculators are at least 2 years too late and can make better money elsewhere. However, the investors who are in it for more than 6 months can still make money- but over a period of years.

There will always be a much larger rental market here than in the UK as so many people here are terrified of buying, or just can't afford to, or are only here on fixed term contracts. An Englishman's home is still his castle and pretty much everybody aspires to own their own place.

IndieG

If I had invested my hard earned money in Dubai Lagoons(in 2005), Dubai Pearl (in 2004), The Lighthouse (in 2003), Ocean Heights (in 2004), The Lighthouse (2003), and numerous other projects where investors have paid over 50-60% of the price, and the project hasn't even gotten off ground, I would be doomed and a wreck today.

If these developers now finally decide to build, their costs would have have skyrocketed and their original selling price will not even remotely cover their costs - so unless they take a huge hit on their profits out of the goodness of their hearts, sadly many investors will lose some of their hard earned money.

People have also lost money in property markets here - you just don't hear about it.

expat.brat

However if you had invested your hard earned money in Emirates Hills (Springs, Meadows, Greens, Hills), Arabian Ranches, Green Community, Dubai Marina, Jumeirah Beach Residences, Ewan Residences, Discovery Gardens, Jumeirah Lake Towers, Palm Jumeirah, Palm Jebel Ali, Burj Dubai, Emaar Towers, to name a few, you would have made more than 50% on top of your original investment, and would have been feeling a lot more cheerful than you are now, instead of signing anyway most of your salary to your landlord.

TA5

Are you serious?

Give me one example of when this has worked historically and i'll listen.

IndieG

I am extremely cheerful, thanks to a fantastic day at work and lots of good news!!!

PS: Since you're so concerned, thought you should know -I am signing away 10% of my salary to the landlord.

expat.brat

I can't think of any other place where capitalism is king, and where a city/country functions just like a business aka Dubai Inc.
Can you?

TA5

Wow, don't know where to begin. You may need to get an education before you start talking again.

Definition of Capitalism:
Capitalism generally refers to an economic system in which the means of production are all or mostly privately owned and operated for profit, and in which investments, distribution, income, production and pricing of goods and services are determined through the operation of a free market economy.



Dubai is about the furthest thing from capitalism in the world, even communist china.

Also, businesses, as you equate dubai to, are designed to make the owners (ruling family and nationals) rich, not the clients (sucker property investors)

expat.brat

So Dubai is communist then?

TA5

Good one!

Eeyore

The former Soviet Union is the textbook example of that. And look what happened there.

Any government can only meddle for so long before the market reasserts itself. Take the UK; the former Governor of the Bank of England has admitted that a colossal mistake was made in keeping interest rates so low for so long. They did so specifically to keep people borrowing and spending and hence keep the economy moving, but they knew at the time it was unsustainable in the long term... and look what's happening now. Massive house price inflation, driven by the low interest rates and a willingness for banks to lend individuals far more money than they would have even a few years ago, has created a debt crisis for millions.

It's very telling that during the last house price crash in the early 90s, interest rates almost doubled before significant numbers of people found themselves in financial difficulty. In 2007, interest rates have only gone up by fractions of one percent and yet it's having the same effect. People have lost the breathing space that used to be built into the system, and so even a small increase in their mortgage payments is pushing them over the edge.

Unfortunately for the government, they're caught on the horns of a dilemma. On one hand they need to try and maintain property values (or at least the *illusion* of property values), on the other they need to placate businesses that are here already and which are complaining bitterly about the escalating cost of employing staff (why do you think the rent cap was introduced? It wasn't out of the goodness of the government's heart, they were responding to pressure from business leaders), and they also need to keep attracting new businesses, and that means keeping inflation and the cost of living as low as possible.

It's an impossible balancing act. The finest economic minds in the world (none of whom are based in Dubai) can't square that circle.

Sorry EB, but Tom is absolutely right. Capitalism is *not* king in Dubai - even a secondary-school knowledge of economic theory should have taught you that.

Dubai is full of monopolies, price controls and other protectionist policies - the absolute antithesis of capitalism. Take telecoms; how the hell can you call Dubai "capitalist" when the two national telecoms providers are both owned by the government and are forbidden from competing with each other on price? How is that in any way capitalist?

In capitalist economies the consumer is king; in Dubai the consumer can go screw him/herself - they get what they're given and they're expected to like it. And they frequently can't take their business elsewhere, because there's often nowhere else to go. Of course, there are many companies who would love to come here and take on all the existing monopolies, but the Dubai government won't allow that kind of normal capitalist competition.

Eeyore

But surely even you, BR, can comprehend that you've directly benefited from the extremely late delivery of all the projects that were *supposed* to have been completed in 2004-05. If all those projects had been delivered on time, property values and rents would now be significantly lower.

Or are you genuinely so naive that you think that the rental and property price rises have been nothing to do with restricted supply and are simply down to the fact that the Dubai economy is inherently strong?

You really don't get it, do you, BR? You keep punting this line. You honestly don't seem to understand that the overwhelming majority of Dubai's incoming population is comprised of service-industry workers earning 3000dhs per month or less - often *much* less.

When even the government's own official survey puts the number of people earning more than 20,000dhs per month at just 4.6% of the population, you know that there's going to be a reckoning in the rental market.

Eeyore

.

Border Reiver

I like the last post the best.

Yes, I have benefited from the late delivery of lots of projects- and will probably continue to do so for the next couple of years as I don't see any hope of an improvement in delivery times. Especially after the amnesty for illegal workers sent a large number of the blue collar workers (should that be blue overall?) building the developments home.

Nobody, even the government, knows what the actual rate of increase in population will be for the next couple of years or how much they will be earning. That really is one where we will have to wait and see. No doubt that we do need more low cost housing though especially if the government crack down on villa sharing.

Eeyore

I realise that there's a surfeit of sand around here, but you don't *have* to plunge your head into it with such abandon, you know

The government will have a very good idea of the rate of increase of the population over the next couple of years, because the companies that will move here over the next couple of years will already be well into negotiation about it. And as for what they'll be earning, it was pointed out three years ago that for Dubai's current property plans to make sustainable sense, the high-earning population would have to double by 2008-09 - which was, and obviously still is, completely unrealistic by any measure.

Border Reiver

Hey, you're getting witty in your old age. I'd send you some Karma but it won't let me.